News & Views

Why China is leading the way in social commerce

Vincent Digonnet, executive chairman APAC at Razorfish, shares his opinion on the fierce social commerce battle taking place in China and explains why the country is 10 years ahead of Europe and the USA

Social commerce is serious business in China. Social media platforms are moving to e-commerce and e-commerce players are developing their own social platforms in an epic clash-of-the-titans between heavyweights Alibaba and Tencent. In the largest market in the world there’s a fierce battle being fought in social commerce. And there’s a lot to be learnt.

Chinese netizens are massive creators of content while their Western counterparts are mainly spectators. The population on social media platforms in China is older while the population with disposable income is younger.

The result of these two opposite trends is a very small overlap in the West between the population on social media and brand consumers. Hence the difficulties for Facebook to monetize their platform with brands without putting off their members. In China it is the reverse, the huge overlap makes social media platforms a natural battleground for brands.

If the demographics explain the better fit between social media and brand engagement in China, it is the origin of the development of social media which explains why Chinese are such avid content creators. There, the adult Chinese population, isolated by the vastness of the country and the lack of family social life resulting from the one child policy, jumped on this new tool to redefine social ties and create communities in defiance of authorities, media and institutions they did not trust.

The result is 300 million people who will never make a purchase without having collected first all the existing information on the net plus the experience and opinion of their peers on both social and e-commerce platforms. In China, 75% of all online users post ratings and reviews at least monthly. In the US and Europe, the figure is less than 20%.

Social media is a small component of the overall marketing activity in the West; it is the backbone of any brand engagement in China.

Generally speaking, Western brands are not capitalising on the social nature of online shoppers in China, and it is largely the local players that have embraced social components on their e-commerce platforms, having understood that user generated content is even more important in China than elsewhere.

Western companies need to stop thinking that Chinese companies are merely copying what they do. They improve, add functionalities and transform them to fit behaviour. Companies like Taobao, Tmall, Jing Dong and Meilishuo offer highly sophisticated product recommendations that drive transactions and increase average order value. Mobile app WeiXin (WeChat) has the messaging functionality of WhatsApp plus geo localization, mobile e-commerce features, and a rechargeable mobile wallet.

With such intricate offerings, it’s no wonder that global one-size-fits-all social approaches don't work in China. ASOS, the global online fashion and beauty retailer, famous for leveraging the social nature of online shoppers in Europe, understands this well, and chose Razorfish to develop their China site as well as an Android Mobile Store APP, fully commerce enabled, connected with hybris. Social interactions have been integrated into asos.com/cn, and visitors can login with their Weibo account.

Social commerce is a true revolution coming your way, but watch out for a sea change set to affect the world’s banking system. In recent months, China’s web giants, Baidu, Alibaba and Tencent have applied for financial services licenses, allowing them to offer savings portfolios, loans, insurance, and payment methods. With the Renminbi likely to become a globally utilised currency in the near future, how long will it take before these China web giants take on Western banks?

China is 10 years ahead when it comes to use of social media, online and mobile shopping. Although the origins of behaviors are very different, the West and East will intersect in the future. Marketers would be wise to anticipate this development, watching China’s trends, technology developments and user behaviour very closely.